Innovation
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INTRODUCTION
1.EXECUTIVE SUMMARY
2.ELEMENTS OF INNOVATION
2.1 THE TYPES OF INNOVATION
2.2 CLASSIFICATION OF INNOVATION
2.3 DRIVERS OF INNOVATION
2.4 ENABLERS OF INNOVATION
2.5 BARRIERS TO INNOVATION
3. INNOVATION WITHIN BANKING ORGANISATIONS
3.1 TUNNEL VISION AS A BARRIER
3.2 CUSTOMERS AS ENABLER WITH LEGISLATION AS A DRIVER
4. INNOVATION AS A TOOL
4. RECOMMENDATIONS
4.1 THE MAVERICKS
4.2 READ THE SIGNS
4.3 COMMUNICATE
4.4 IDEAS INCLUDE
5. CONCLUSION
REFERENCES
INTRODUCTION
Innovation is defined as the application of knowledge in a novel way, primarily for economic benefit. Innovations have two main characteristics. First, innovations break the mould by applying knowledge in some novel way. Second, innovations are the result of a chain of events that starts with the original idea, invention or discovery, and then proceeds (usually in a chaotic manner) though prototype construction, financing, customer demonstration, field trials, engineering, and production, marketing and finally sales. Only by successfully completing this obstacle course can an invention be considered innovation. Apart from skill and resources, the most important requirements are clear head, an ability to improvise and dogged determination.
Revenue growth is the primary driver of shareholder value and the number one challenge for financial services companies in South Africa and the world. Yet, at the same time the industrys growth objectives are often tempered by a continuing focus on cost containment, legislative and regulatory environment in SA. Financial institutions need to evaluate the role of innovation in both creating and sustaining revenue growth.
1.EXECUTIVE SUMMARY
In todays highly competitive environment financial organisations must use every competitive advantage to attract new customers, retain existing customers and reduce cost in order to maximise profits.
The real challenge though, is to attempt all of the above while faced with what is seen as barriers of innovation. These include rigid strategic planning, culture, structures, intolerance, and tunnel vision. It is not difficult to understand when organisations within the banking environment show shocking signs of ageing organisations.
It is clear that the financial services industry is best measured within, Abrahams & Knights 2001, pg 21, Diffusion Theory of innovation. Looking at the trends, barriers and enablers of innovations financial context, a combination of incremental and radical change/approach is the obvious next step to ensure the future curve.
2.ELEMENTS OF INNOVATION
Source:Adapted from EM Van Zyl 2005
2.1 THE TYPES OF INNOVATION
product
process
organizational
and marketing
Product innovation relates to both goods and services. It is when a good or service is introduced to the firm or it is new to the firm. For example, Nedbank Personal Loans division implemented the Auto Account. The bank was the first to offer vehicle financing for second hand vehicles between 5 and 20 years.
Process Innovation focuses on the way work is done, making it better, faster and cheaper. Process innovation includes new work strategies, e.g. low-cost producer strategies, process design activity and the implementation of change.
Organisational innovation relates to significant change in an organisation that significantly improves performance. An example is the reduction in the number of management levels to create flexibility in decision-making.
Marketing Innovation includes significant changes in sales and marketing methods.
This will include product appearance and packaging to increase product appeal. An example would be bundling goods and services in new ways to appeal to market segments.
2.2 CLASSIFICATION OF INNOVATION
The different classifications that have been developed are :
2.3 DRIVERS OF INNOVATION
Provide the stimulus to move away from the status quo
Environmental factors as drivers of innovation
Competition as driver of innovation
Technology as driver of innovation
Particularly in the South African Banking industry the drivers are mainly competition and environment (legislation)
Financial Intelligence Centre Act, No. 38 of 2001 A system of administrative measures to control money-laundering and to facilitate